Part I Item 1. Business Intuitive Machines is a space infrastructure company with a first-mover advantage in the lunar economy, supported by NASA contracts and a successful Moon landing - Intuitive Machines is a space infrastructure and services company with a first-mover advantage, evidenced by three NASA Commercial Lunar Payload Services (CLPS) awards and the successful IM-1 mission, which saw its Nova-C lander become the first U.S. vehicle to soft-land on the Moon since 197219 - The company operates across four business units: Lunar Access Services (lunar landers), Orbital Services (satellite servicing), Lunar Data Services (lunar communications network), and Space Products and Infrastructure (propulsion, navigation systems)30 - The company's growth strategy focuses on leveraging its first-mover advantage in lunar transport, expanding into adjacent lunar markets like power and habitats, and pursuing opportunities in the orbital services market585960 Key Business Metrics (as of December 31, 2023) | Metric | Value | | :--- | :--- | | Contracted Backlog | $268.6 million | | FY 2023 Revenue | $79.5 million | | Lunar Access Services Contracted Value | $336.6 million (NASA, commercial, rideshares) | | OMES III Contract Value (Up to) | $720.0 million | Item 1A. Risk Factors The company faces significant operational, financial, and structural risks, including a limited history, high customer concentration, and a 'controlled company' structure - Business and operational risks include a limited operating history, dependence on key personnel, intense competition, potential for launch failures or accidents, and reliance on a limited number of suppliers858793103 - The company has significant customer concentration, with approximately 74% of its revenues for the year ended December 31, 2023, coming from one major customer92 - The business is heavily dependent on U.S. government contracts, which are subject to partial funding, immediate termination, and heavy regulation96134 - Structural and financial risks include the company's holding company structure (Up-C), which makes it dependent on distributions from its operating subsidiary to pay taxes and expenses, including substantial obligations under a Tax Receivable Agreement154159 - The company is a "controlled company" as its founders control a majority of the voting power, allowing them to rely on exemptions from certain corporate governance requirements173185 Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments - None194 Item 1C. Cybersecurity The company maintains a multi-layered cybersecurity strategy overseen by the Board and is compliant with key government contractor standards - The company employs a multi-layered approach to cybersecurity, using next-generation firewalls, malware blocking software, and vulnerability reporting tools, and engages third-party consultants for risk assessments198 - The Board of Directors maintains oversight of cybersecurity, while the IT organization manages the overall security strategy and response200201 - As a government contractor, the company complies with standards including ISO/IEC 27001, NIST SP 800 series, and is progressing towards Cybersecurity Maturity Model Certification (CMMC) 2.0202 - The company has not experienced any cybersecurity incidents that have had a material impact on its business, operations, or financial condition199 Item 2. Properties The company's primary facility is its new Houston headquarters, with a significant employee presence at NASA's Goddard Space Flight Center - The main facility is the Lunar Production and Operations Center (LPOC) in Houston, Texas, completed in late 2023, which covers over 100,000 square feet203 - The company also has a significant presence in Greenbelt, Maryland, with over 100 employees working at the Goddard Space Flight Center to support the OMES III contract for NASA204 Item 3. Legal Proceedings The company is involved in various legal proceedings arising in the ordinary course of business - The company is involved in various legal proceedings in the ordinary course of business, with further details provided in Note 14 of the consolidated financial statements205 Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable206 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock trades on Nasdaq with a concentrated number of holders, and there is no current plan to issue dividends - Class A Common Stock and Public Warrants trade on Nasdaq under the symbols "LUNR" and "LUNRW"208 - As of March 15, 2024, there were 46 holders of record of Class A Common Stock209 - The company has never paid dividends and has no current plans to pay them in the foreseeable future210 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue decreased in 2023, but net income turned positive due to non-operating gains, while the operating loss widened and the company secured new funding - The decrease in 2023 revenue was primarily driven by a $27.9 million reduction in revenue from the IM-1 mission, partially offset by a $19.5 million increase from engineering services272 - The significant increase in net income was primarily due to non-operating gains, including a $66.3 million favorable change in the fair value of earn-out liabilities278 - Backlog increased by $66.7 million to $268.6 million as of December 31, 2023, mainly due to new awards including the OMES III project283284 - The company secured significant liquidity through the Business Combination ($34.1 million gross), a private placement ($20.0 million gross), and subsequent warrant exercises and equity transactions in Q1 2024 ($60.6 million gross)296297298 Results of Operations (Year Ended December 31) | (in thousands) | 2023 | 2022 | $ Change | | :--- | :--- | :--- | :--- | | Revenue | $79,521 | $85,946 | $(6,425) | | Cost of revenue | $100,472 | $75,513 | $24,959 | | Operating loss | $(56,237) | $(5,507) | $(50,730) | | Total other income (expense), net | $71,299 | $(921) | $72,220 | | Net income (loss) | $15,022 | $(6,405) | $21,427 | Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, this disclosure is not required - The company is a smaller reporting company and is not required to provide this information329 Item 8. Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements, which received an unqualified opinion from its independent auditor - The independent registered public accounting firm, Grant Thornton LLP, issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2023 and 2022335 - The Business Combination in February 2023 was accounted for as a reverse recapitalization, with Intuitive Machines, LLC as the accounting acquirer357 - Subsequent to year-end, in Q1 2024, the company raised approximately $60.6 million in gross proceeds from a series of warrant exercises and other equity transactions374 Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total Assets | $85,908 | $67,004 | | Total Liabilities | $139,327 | $124,623 | | Total Mezzanine Equity | $209,863 | $0 | | Total Shareholders' Deficit | $(263,282) | $(57,619) | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None561 Item 9A. Controls and Procedures Management concluded that disclosure controls and internal controls over financial reporting were effective, with previously identified material weaknesses now remediated - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023564 - Management assessed internal control over financial reporting using the COSO framework and concluded it was effective as of December 31, 2023565566 - Material weaknesses previously reported in the 2022 Form 10-K related to revenue recognition, significant transactions, and segregation of duties were successfully remediated as of December 31, 2023567568 Item 9B. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans in the fourth quarter - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fourth quarter of 2023572 Part III Item 10. Directors, Executive Officers and Corporate Governance The company's leadership and board structure are detailed, highlighting its status as a 'controlled company' exempt from certain governance rules - The executive team is led by co-founder Stephen Altemus (CEO & President), with co-founder Dr. Kamal Ghaffarian serving as Chairman of the Board574575585 - The Board is classified into three staggered three-year terms and has four independent directors598606608 - The company qualifies as a "controlled company" under Nasdaq rules because its founders hold over 50% of the combined voting power, exempting it from certain governance requirements604 - The Board has four standing committees: Audit, Compensation, Nominating and Corporate Governance, and Conflicts606 Item 11. Executive Compensation Executive compensation for 2023 included base salaries and stock awards, with no cash bonuses paid for performance - No discretionary cash bonuses were paid to named executive officers for 2023; instead, the Board approved one-time special performance-based restricted stock unit (RSU) awards in February 2024627630 - In May 2023, the company granted time-based RSUs to former CFO Erik Sallee (550,000 shares) and General Counsel Anna Jones (50,000 shares), which vest over four years633 - The non-employee director compensation program includes an annual cash retainer of $55,000 and an annual RSU award with a value of $155,000654655659 2023 Named Executive Officer Compensation | Name | Position | Total Compensation ($) | | :--- | :--- | :--- | | Stephen Altemus | President and CEO | 714,483 | | Timothy Crain | CTO | 441,190 | | Erik Sallee | Former CFO | 4,609,212 | | Anna Jones | General Counsel | 608,262 | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Voting power is highly concentrated among the company's founders, who beneficially own over 83% of the total voting power - The company's capital structure includes Class A (1 vote/share) and Class C (3 votes/share) Common Stock, which concentrates voting power with the founders661 - The company maintains two equity compensation plans: the 2021 Unit Option Plan and the 2023 Long Term Omnibus Incentive Plan, which has 10,879,865 securities remaining available for future issuance668670671 Security Ownership of Major Holders (as of March 15, 2024) | Beneficial Owner | % of Total Voting Power | | :--- | :--- | | Dr. Kamal Ghaffarian (Chairman) | 52.8% | | Stephen Altemus (CEO) | 18.9% | | Dr. Timothy Crain (CGO) | 12.0% | | Armistice Capital, LLC | 8.9% | | All directors and executive officers as a group | 83.4% | Item 13. Certain Relationships and Related Transactions and Director Independence The company engages in several related party transactions, primarily with entities affiliated with its Chairman, governed by a formal policy - In January 2024, Ghaffarian Enterprises, LLC, an entity affiliated with Chairman Dr. Kamal Ghaffarian, contributed $10.0 million to the company to repay a credit line in exchange for shares and warrants673674675 - The company engages in ordinary course business with other entities affiliated with Dr. Ghaffarian, including Axiom Space, X-energy, IBX/PTX, and ASES678679680682 - Key governance documents include the A&R Operating Agreement and the Tax Receivable Agreement, which requires the company to pay 85% of certain tax savings to original LLC members685688 - The Board has a written Related Person Transaction Policy requiring review and approval of such transactions by the Audit Committee703 Item 14. Principal Accountant Fees and Services Total fees paid to the independent auditor, Grant Thornton LLP, increased significantly in 2023 to $3.1 million - The Audit Committee pre-approved all audit and non-audit services provided by Grant Thornton LLP, consistent with its charter and policies711 Accountant Fees (in thousands) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit fees | $1,080 | $445 | | Audit-related fees | $828 | $1,225 | | Tax fees | $909 | $43 | | All other fees | $321 | $0 | | Total fees | $3,138 | $1,713 | Part IV Item 15. Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including key agreements and certifications - This section provides an index of all exhibits filed with the annual report, including governance documents, material contracts, and required certifications715717 Item 16. Form 10-K Summary The company elected not to provide a summary for this item - None718
INFLECTION POINT(IPAX) - 2023 Q4 - Annual Report